Concerns linger as phone deal finalized
By Sean Hao
Advertiser Staff Writer
Nearly one year after the deal was first announced, Verizon Hawaii is scheduled tomorrow to become Hawaiian Telcom upon the close of a $1.6 billion sale to The Carlyle Group.
New owner: The Carlyle Group Purchase price: $1.6 billion Expected close date: Tomorrow followed by a nine-month transition period Impact on phone customers: Few noticeable changes, one-time $20 rebate, promise of no rate increases until 2009, addition of optional wireless phone service Impact on DSL customers: Loss of free MSN Premium anti-virus and firewall software, may face higher rates and/or need to change e-mail addresses
Apart from new business signs, a different company name on phone bills and a rebate of about $20, most telephone users won't notice the change, according to the two companies.
Verizon becomes Hawaiian Telcom
Hawaiian Telcom addressed the top-most concern of many consumers when it said it won't seek a telephone rate increase before 2009.
But for other services provided by the company, including broadband Internet access through digital subscriber lines or DSL, the transition is proving a bit bumpier.
Customers have complained about a plan by Hawaiian Telcom to withdraw free anti-virus and firewall computer software from Verizon Hawaii broadband Internet subscribers and some worry that other unwanted changes may be coming.
Some Verizon Hawaii DSL subscribers were notified April 14 that they will lose the firewall and virus protection services on May 15, unless they re-registered for the service by yesterday. MSN Premium will remain free for another six months to those who sign up for the offer, after which regular monthly charges of $9.95 a month will apply. That would equate to about a 30 percent increase on a $30 DSL bill.
Verizon Hawaii said the change was necessitated by the Carlyle sale. MSN Premium is currently offered as an exclusive deal with Verizon Communications. State officials cannot dictate which DSL services must be continued because that portion of Verizon Hawaii's business is unregulated.
The change in DSL services has some customers considering other options.
"I took it a month early, I think," lamented Daniel Ford, a new Verizon DSL customer in Kailua. "That's a dirty deal just after I switched."
Ford said he's thinking of switching back to Oceanic Time Warner Cable's Road Runner Internet service.
Road Runner charges a higher monthly rate but it includes anti-virus and other common security software.
Verizon spokeswoman Ann Nishida said even if customers face paying more for MSN services, DSL remains competitive.
"We know customers want value with their broadband service and even if they elect to continue MSN Premium after the 6-month free period, this remains a very competitive offer," she said.
Hawaiian Telcom said it's considering providing customers a service similar to MSN.
"We don't want to raise false expectations, but we're clearly looking at offering something similar," said Lester Chu, vice president for planning and strategic development at Hawaiian Telcom
Still, the loss of the free services dimmed hopes that the sale of Verizon Hawaii to Carlyle would leave customers unaffected.
Changes may not end with the MSN services.
After a transition of about nine months, DSL subscribers may see modifications to their bundled service offers and e-mail addresses.
In changing services, Hawaiian Telcom risks losing more ground to wireless and cable communications providers that had eroded Verizon's customer base.
According to regulatory filings, Carlyle expects the number of residential access lines to decline 1.3 percent annually through 2009.
Carlyle brought extensive telecommunications experience when it purchased Verizon Hawaii. However, the private equity group isn't expected to keep the state's major phone company long term.
"I don't think we could find a company that's more disinterested in customer service than Carlyle," said Ray Greiner, a Verizon DSL customer in Kapolei. "They're just interested in making a buck.
Hawaiian Telcom's Chu said he understands why some customers are frustrated.
Hawaiian Telcom didn't notify customers of the changes in services because until the sale goes through, they are still Verizon customers.
"We don't have the right to contact them," he said.
Chu acknowledged there will be "potential instances with confusion with some of the communications that will come out. This is a very complicated transaction."
John Cole, executive director of the state consumer advocacy office, agreed, but added that customers should beware.
"Definitely be on the lookout for any anomalies in your bills," he said.
Company officials say the Carlyle purchase should ultimately result in better customer service as Hawaiian Telcom evolves into a locally managed company focusing exclusively on Hawai'i.
"That's certainly what's going to make us successful in the marketplace," Chu said.
Reach Sean Hao at shao@honoluluadvertiser.com or 525-8093.
